Assignment Exercise 231: Cost of Owning and Cost of LeasingCost of owning and cost of leasing tables are reproduced below.Required Using the appropriate table from the Chapter 12Appendices, record the present value fac- tor at 10% for each yearand compute the present value cost of owning and the present valueof leasing. Which alternative is more desirable at this interestrate? Do you think your answer would change if the interest ratewas six percent instead of ten percent? Cost of Owning: AnywhereClinicComparative Present Value For-Profit Cost of Owning: Year 0Year 1 Year 2 Year 3 Year 4 Year 5 Net Cash Flow (48,750) 2,5002,500 2,500 2,500 5,000 Present value factor Present value answers¨« Present value cost of owning ¨« Cost of Leasing: AnywhereClinicComparative Present Value Line For-Profit Cost # of Leasing:Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 19 Net Cash Flow (8,250)(8,250) (8,250) (8,250) (8,250) – 20 Present value factor 21Present value answers ¨« 22 Present value cost of leasing ¨«
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